Beijing retaliates as new US tariffs kick in on $16 billion of Chinese goods

Markets should expect bilateral tit-for-tat trade actions to continue for the foreseeable future as both the U.S. and China have managed to convince themselves that they wouldn't "lose out in this trade war too much," said Bo Zhuang, chief China economist at investment research firm, TS Lombard. Beijing will allow the Chinese yuan to "passively devalue" in order to cope with the impact of the U.S. tariffs although authorities will likely blame any decline in the currency on the markets, Zhuang said. "One way or the other, they have to do something. Otherwise the Chinese economy is going to tumble," Zhuang added.